-Statement of Cash Flows

Question 1

What items are included in operating activities on the Statement of Cash Flows?

Answer 1

Operating activities include:

• Cash received from customers
• Interest and Dividends
• Trading Debt Securities
• Cash paid to Vendors and Suppliers
• Interest
• Taxes from Operating Activities

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Question 2

What items are included in investing activities on a Statement of Cash Flows?

Answer 2

Investing activities include:

• Cash received:

Sale of PP&E

Sale of Investments

Loan Principal

• Cash paid:

Loans

Acquisitions

AFS or HTM Debt Securities

Taxes from Investing Activities

Trading Debt Securities

Question 3

What items are included in Financing Activities in a Statement of Cash Flows?

Answer 3

Financing activities include:

• Cash received:

Issuance of Stock

Issuance of Debt

• Cash paid:

Dividends

Question 4

What is the direct method for a Statement of Cash Flows?

Answer 4

The direct method starts with Income from Continuing Operations.

It adjusts for changes in accounts like A/R, A/P, Inventory and non-cash revenues, expenses, gains, losses.

If used, the Indirect Method must also be shown.

Question 5

What is the Indirect Method for a Statement of Cash Flows?

Answer 5

Indirect method starts with Net Income.

It adjusts for changes in accounts like A/R, A/P, Inventory and non-cash revenues, expenses, gains, losses.